Making Tax Digital
Making Tax Digital – The Latest Update
HMRC’s plans to achieve a more accessible and transparent tax system has been given the title of Making Tax Digital – or MTD for short. This will help businesses steer clear of errors, and HMRC claim reduce an £8bn shortfall to the public purse.
Under MTD there will be a requirement for the majority of tax payers to start to keep track of their tax affairs digitally and update HMRC quarterly from 2018. This revolutionary UK tax system will eventually bring about an end to annual self-assessment for millions of people and businesses.
HMRC have recently* completed an extensive consultation process on the subject and have made some changes but the overall timeline remains the same.
However, HMRC will be piloting any changes before implementation, and will begin piloting digital record keeping and quarterly updates for one full year from April 2017. This staged approach is a direct response from the feedback received during the consultation process and they claim should ensure that not only is the software user-friendly, but the timescale will give individuals and businesses the time to prepare and adapt.
The current plan is that individuals and small business will have access to their own secure digital tax account, similar to an online bank account, which enables them to interact with HMRC digitally.
Businesses will be able to see, through their digital account, a real-time view of their tax calculation and the tax due. This will give a transparent understanding of how much tax is owing, and help businesses to budget for their tax liabilities.
The consultation also looked at options for businesses, self-employed people and landlords to make and manage voluntary payments of their tax through the year. Whilst this was supported generally by respondents to the consultation, it was recognised that the process supporting early repayments would be better left until Making Tax Digital for Business is fully embedded.
This ease of reporting and the general simplification of the tax system is promoted as a positive by HMRC, but for some businesses these imminent changes will be interpreted as having to spend more time on the paperwork and less time actually working and building the business.
However, the move towards a fully digitilised tax system by 2020 will require the majority of business owners to maintain digital records using compatible software – thus ringing the death knoll on the more traditional way of keeping paper books and records.
At Wright Vigar we are ready to help you with these changes. We have a dedicated team of accountants and advisors on hand to help you understand and embrace the benefits of Making Tax Digital, and get to know a little more about the time-saving solutions that new technology has to offer.
If you would like to hear more about Making Tax Digital, and how Wright Vigar’s team of experts can help you, please contact a member of the MTD team at your local office, call 01522 531341, or email email@example.com – we would be delighted to discuss these changes in more detail, and explain how they will affect you.
To download a copy of our Making Tax Digital / Cloud Solutions brochure click here
To read a summary of the consultation responses as prepared by HMRC please click here
*31 January 2017